Discuss the Similarities and Differences Between the Resourced Based View of Strategy and the Industrial Organisation (I/O) Based View of Strategy

2058 Words Feb 9th, 2012 9 Pages
Discuss the similarities and differences between the resourced based view of strategy and the industrial organisation (I/O) based view of strategy

The similarities and differences between the two views of strategy, resource-based view (RBV) and industrial organization (I/O) view will be critically discussed. According to Hanson, et al. (2011), the RBV model specifies a firm’s strategy internally to earn above-average returns based on its unique resources and capabilities. Resources such as capital equipments, individuals’ skills, patents and finances are formed into a capability and is managed dynamically to achieve competitive advantages over its rivals. The I/O model specifies a firm’s strategy based on external environment with the
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Therefore, intangible assets such as knowledge and high reputation are more reliable and preferable in competing with rivals. For-profit organizations should integrate their resources and capability to become core competency which meets the four criteria of sustaining competitive advantages (Barney, 1994). Otherwise, they might face market failure or lose market share. To analyse the industry environment, there are also Porter’s five forces of competition, the threats of new entrants, the power of supplier, the power of buyers, product substitutes and the intensity of rivalry among competitors (Hanson, et al., 2011). In the mobile industry, there is a high barrier to entry since it is very costly and risky and needs advanced technology and competitive strategies to enter into the market and compete. Apple produces iPhone with high technology which is highly difficult to imitate and follow and has the large market share. Moreover, the start-up cost is also high and therefore, new firms cannot enter the market easily to compete with Apple. Due to its reputation and few numbers of suppliers in the industry, Apple achieves high bargaining power of supplier and obviously buyers have low bargaining power. Moreover, since Apple products are very unique and differentiated from other products such as Nokia and Sony, the Apple Company

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